AWB to pay shareholders $40m

AWB has agreed to pay $39.5 million in the settlement, but accepts no liability

Wheat exporter AWB has agreed to pay shareholders almost $40 million in an out-of-court settlement, in a case dating back to the United Nations Oil-for-Food program kickback scandal.

The shareholders had argued the company should have disclosed kickbacks which it made to Saddam Hussein's regime - payments which contravened UN sanctions.

When the Cole inquiry into the scandal took place in 2006, the company's value plummeted.

It was against that backdrop that up to 1,000 institutional and retail investors took the wheat exporter to the Federal Court.

They claimed the company had been involved in misleading and deceptive conduct by not disclosing the information to the stock market.

Retired wheat farmers John and Kaye Watson led the class action. They had lost thousands of dollars from their retirement and watched in horror as their nest egg was eaten away.

"We're pleased it was all about corporate accountability and we're pleased that it's been settled, and we're pleased that corporate accountability has been brought to the fore," Mr Watson said.

It is yet to be determined just how much of the almost $40 million the Watsons will receive.

The principal of Maurice Blackburn, Ben Slade, who represented the AWB shareholders, was pleased with the settlement amount, despite it being significantly less than the $100 million they had been asking for.

"The settlement that we've got today we feel is a good one for the shareholders, and the shareholders, I think, should be pleased that they've done their bit in putting a company to account," he said.

"This case is complicated by the fact that the information came out of a fairly long period of time during the Cole Royal Commission.

"The information was consumed by the shareholder market over quite a long period of time and that is unusual in shareholder class actions. We felt that the settlement in these circumstances for this number is the right one.

"There are a number of different ways of assessing damage and it's very difficult in these circumstances to say what the right assessment is.

"But certainly this settlement does not represent putting all shareholders back in the position they would have been in had ... the right information been revealed to the market at the time. No, it is a settlement and of course it is not a settlement for full value."

The settlement was secured without any without formal admissions from AWB, although last week the company admitted for the first time it was aware payments were being made to the Iraqi regime.

It denied that the information was market sensitive or that it needed to be disclosed to shareholders.

AWB was unavailable for comment but chairman Peter Polson released a statement.

"The commercially acceptable settlement was in the best interest of shareholders ... It has no impact on the company's commercial operations or its strategic direction," the statement said.

"The company is pleased to put this matter behind it as this is the final legal matter directed against the company in Australia arising out of activities under the United Nations Oil-For-Food Program."

After the ruling, AWB investors were also pleased with the news and the company's share price jumped 9 per cent.